Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 725: Social Interaction and Sickness Absence

Assar Lindbeck (), Mårten Palme () and Mats Persson ()
Additional contact information
Assar Lindbeck: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Mårten Palme: Stockholm University, Postal: Department of Economics, SE-106 91 Stockholm, Sweden
Mats Persson: Institute for International Economic Studies, Postal: Stockholm University, SE-106 91 Stockholm, Sweden

Abstract: Does the average level of sickness absence in a neighborhood affect individual sickness absence through social interaction on the neighborhood level? To answer this question, we consider evidence of local benefit-dependency cultures. Well-known methodological problems in this type of analysis include avoiding the so-called reflection problem and disentangling the causal effects of group behavior on individual behavior from the effects of individual sorting on neighborhoods. Based on data from Sweden, we adopt several different approaches to deal with these problems. The results are robust in the sense that regardless of approach and identifying assumptions, we obtain statistically significant estimates indicating group effects.

Keywords: Sick-pay Insurance; Work Absence; Moral Hazard; Social Norms

JEL-codes: H56; I38; J22; Z13

28 pages, December 17, 2007

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